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What Made Crude Oil Spike on Wednesday?

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Crude oil gained strength

Crude oil started Wednesday on a weaker note as the oil worker strike in Kuwait was called off. But later in the day, crude oil got support from the better-than-expected US crude oil inventories report. At 3:30 EST, WTI crude oil futures for June delivery were trading at $43.81, a gain of 3.2%, whereas Brent crude was trading at $45.46, a spike of 3.3%.

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A look at the crude oil inventory report

According to the report released by the Energy Information Administration (or EIA) at 10:30 AM EST on Wednesday, the weekly change in the number of commercial crude oil barrels held by US firms came in at 2.1 million, which is lower than the market’s expectation of 2.4 million barrels and also below the previous week’s 6.6 million barrels. This supported crude oil prices and lifted the prices higher on Wednesday. The EIA also reported a decline in crude production to 9.0 barrels per day in the week ended on April 15, which is the lowest crude oil production rate since October 2014. This gave support to oil prices and lifted them from early morning lows. For more information, read Market Realist’s Crude Oil Declines as Kuwait Strike Halts.

Output freeze deal

According to Fayyad Al-Nima, the deputy oil minister of Iraq, the OPEC members and other crude producers will meet in Russia probably next month to discuss the output freeze deal. To read more about Sunday’s producer meeting and its aftermath, please read, What Made Oil Prices Rebound on Monday?

With support from oil prices, producers WPX Energy (WPX), Carrizo Oil & Gas (CRZO), and ExxonMobil (XOM) rose 1.6%, 1.9%, and 0.68%, respectively. On the other hand, QEP Resources (QEP) fell 0.51% on Wednesday. The SPDR S&P Oil and Gas Exploration and Production ETF (XOP) rose 1.4%. Similarly, the Russian Market Vector Russia ETF Trust (RSX) and the Market Vector Russia ETF Trust (RBL) rose 2.8% and 2.5%, respectively.

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